Commotion Over Demonetisation Not To Last Long, Markets May Gain From Here

A month since Narendra Modi’s biggest step towards reforms since he secured his chair in the national capital, demonetisation, seems Indian equity markets have started behaving steady at the time of sending this report to print. Markets faced jolt from two unexpected happenings all of a sudden--victory of Donald Trump one morning that we had got to note and a night when the country’s Prime Minister in a rare television appearance announced scrapping of two high-denomination currency notes sparking off debates around the country over demonetisation and its various effects on industries and human lifestyle as well.

Meanwhile, in a latest twist in the economy tale, Reserve Bank of India (RBI) denied to opt for rate cut keeping repo unchanged at 6.25 per cent causing heavy bleeding of the banking stocks on December 7. So now that demonetisation process is on place and we are coping up with adjusting in various ways in life, starting from paying for green vegetables through mobile wallets and handling the brand new purple colour Rs.2000 notes, markets also seemingly have been attempting to adjust with this revolutionary step taken by Modi-led government in the Centre. While we whole-heartedly appreciate the demonetisation efforts of the government, we also believe digitisation to gain further momentum and several new players will be able to make their entries significant thus not only adding to GDP but also generating employment.

Also as the RBI claimed over Rs.11.85 lakh crore of fresh deposits have been made in the system till December 7, banks may see some fresh lease of life in spite of the CRR norms pushed in place by the apex bank. The government actions towards cleansing the black money from the system by also raiding the apparently non-happening Jan-Dhan accounts prove the seriousness on part of the Centre to make the system cleaner and stronger. Meanwhile, let the debates on the pros and cons of this crucial move continue. One disturbing factor here is continuous selling by FIIs in the Indian markets which has weakened the Rupee upto some extent. But then as right now some excellent stocks are available to buy at a lower price, we believe, FIIs have to come back and do some significant shopping here. The valuations, after all, are looking very attractive at this time and I am sure, they will not be too keen to lose such a golden opportunity. As we talk, we are approaching to the end of this calendar year and gearing ourselves to embrace 2017. To help with a guidemap for stocks to invest in the year approaching, we have come up with a New Year portfolio going by our convention. If you go back to our 2016 New Year portfolio, you will be able to find that stocks like Bajaj Fin then recommended, now have been doing extremely well bringing in enough fortune for our reader-investors.

The portfolio crafted one year back, has brought you 12.6 per cent return on a year on year basis while the markets got you little above 5 per cent. So even when tides are against you, lean on your favourite investment fortnightly, DSIJ. The point is proven once again. You will also be able to find an exhaustive report on the real estate sector following demonetisation. The report is aimed at clearing the confusion over whether this is the time to invest in real estate, stocks of real estate companies as banks are softening their loan rates. This report, I am sure, will get you much clarity in these days of rumours and unnecessary clatter across the markets. While earnings for the third quarter may have a temporary impact due to the recent moves by the Centre, we believe the Union Budget due on February 1, 2017 and also implementation of GST by next summer will bring in much senses of optimism on the Dalal Street. I am sure, markets will gain strength from these two upcoming events. So stay wise, stay with us--make a right move by picking up right stocks available at a lower valuations, invest for a longish period and build fortune.